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VC-BACKED M&A SNAPSHOT

Q2 2013
July 11th 2013

VC-BACKED M&A SNAPSHOT

OVERVIEW COMMENTARY
Despite the lower overall M&A activity levels in Q2 (see our Q2 2013 M&A Snapshot), venture-backed M&A exits remained relatively consistent with Q1 2013 levels, as we saw 11 transactions within the $25mm - $1b range. Total consideration paid for VC-backed companies was equal to Q1s value of $2.1b. Summary observations for the quarter include: 1. The largest venture-backed exits this quarter were Googles $1.3b acquisition of crowdsourced trac app, Waze, representing a 19.4x investment return and Yahoos $1.1b acquisition of micro-blogging social network, Tumblr, representing a 8.8x return on invested capital. The median return on invested capital was 8.8x(a) Five transactions within the $25mm - $1b value range provided >10.0x invested capital multiple returns to investors:
Buyer / Seller Trx Value/ Invested Cap 37.8x 26.0x 17.6x 12.1x 10.0x Seller Description Tween-focused Youtube channel Mobile app location-based services Marketing automation platform Mobile backend-as-a-service platform Enterprise class storage

FOLLOWING ANALYSIS
SUMMARY OF VC-BACKED M&A EXITS: VC-BACKED M&A TRANSACTIONS:
SUMMARY OF QUARTERLY ACTIVITY IN NUMBERS AND TONE

LISTING OF TRANSACTIONS.

VC-BACKED

2. 3.

Dreamworks / AwesomenessTV Aruba / Meridian Apps Adobe / Neolane Facebook / Parse Fusion-io / Nexgen Storage

4.

U.S. sellers comprised 72% of total VC-backed transactions within Q2 2013.

(a) Note: Data pertains to 10 transactions in the quarter (out of a total of 11), where both acquisition price and total invested capital were disclosed between the $25mm - $1b range.

VC-BACKED M&A SNAPSHOT - SUMMARY

COVERAGE
Architect Partners tracks venture capital-backed M&A activity within the converging Internet | mobile | digital media sectors. The following assessment is focused on venture capital-backed M&A transactions with announced values of between $25mm and $1b as these typically represent successful business-building endeavors. We also include two transactions with announced values above $1b.

MARKET TONE
Average. Relatively consistent number of VC-backed exits and total consideration paid. Quality businesses with momentum will continue to attract strong interest. Strategic-driven transactions command premium values.

Q2
27

2011 Q3

Q4
21

Q1
16
4

2012 Q2 Q3
25 20
9 5 15

2013 Q4
15
3

Q1
9

Q2

4 27

2 23 23 19

14

13

2 16 12

2 11

Venture-Backed M&A Exits (#)1............................

$4.2 $3.4 $3.6 $2.3

12

16

12

12

$3.7 $1.8

$3.8 $3.1
$1.8

$3.7 $2.1 $2.1

Total Consideration Paid ($b)2,4............................

$103 $104

$129
$80 $95

$152 $76

$129

$152
$112

$123

$150

Median Transaction Size ($mm)2,4........................

63% 64% 67% 73%
75% 84% 73%

63%

75%

64%

71%

72%

U.S.-based Target (%)3.............................................

Note: 1) Dark blue includes VC-backed M&A transactions with announced values of between $25mm and $1b. Light blue includes notable VC-backed M&A transactions where consideration paid was >$1b or not announced, however we believe to have values of between $25mm and $1b. 2) Total consideration paid and median transaction size are calculated based on transactions with announced values of between $25mm and $1b. 3) Percentage is based on U.S. target, calculated based on cumulative transactions. 4) Transaction values with a range are presented as a mid-point value

VC-BACKED M&A SNAPSHOT - TRANSACTIONS

Below we highlight Q2 2013s venture capital-backed M&A exits. This list contains transactions within the $25mm to $1b value range as well as two transactions exceeding $1b.

TARGET

ACQUIRER

ACQUISITION PRICE ($mm)

$1,300

CAPITAL ($mm)
$67

INVESTED

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

19.4x

TARGET M&A LOCATION ALERT

$1,100

$125

8.8x

$600

$34

17.6x

$370

$60

6.2x

$310

$84

3.7x

$180

$34

5.3x

Source: Architect Partners, Capital IQ and Public Information

VC-BACKED M&A SNAPSHOT - TRANSACTIONS

Below we highlight Q2 2013s venture capital-backed M&A exits. This list contains transactions within the $25mm to $1b value range as well as two transactions exceeding $1b.

TARGET

ACQUIRER

ACQUISITION PRICE ($mm)

$151

CAPITAL ($mm)
$4

INVESTED

MULTIPLE OF INV. CAPITAL VENTURE CAPITAL FIRMS

37.8x

TARGET M&A LOCATION ALERT

$150

NA

NA

$120

$12

10.0x

$90

$12

7.5x

$85

$7

12.1x

$30

$10

3.0x

$26

$1

26.0x

Source: Architect Partners, Capital IQ and Public Information

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